Amid the global pandemic of COVID-19 plaguing humanity, a group of leading figures from around the world raised their voices to call for the abolition of more than $11 trillion of debt in developing countries.
The initiative of the anti-debt personalities has the support of the former president of Brazil, Dilma Rousseff; the People’s Power Minister for Foreign Relations of the Bolivarian Republic of Venezuela, Jorge Arreaza; the Minister of Finance of Kerala, India, T. M. Thomas Isaac; the former Finance Minister of Greece, Yanis Varoufakis; the Argentine lawyer and activist Juan Grabois; the director of the Tricontinental Institute for Social Research, Vijay Prashad; and the president of the Zambia Socialist Party, Fred M’bembe.
On July 9, the People’s Power Minister for the Venezuelan Social Labor Process, Eduardo Piñate, on behalf of the Bolivarian Government, raised the proposal to permanently suspend the payment of the debt, during his participation in the World Summit for the International Labor Organization (ILO), due to the health emergency generated by the new coronavirus.
In a statement, the applicants argue that “continuing to pay debt service and remaining bound by these debt burdens means that developing countries will not be able to deal with the pandemic efficiently and effectively, nor will they build the necessary systems for future health emergencies.”
Here is the full text of the document:
According to the available information, the debt of developing countries currently amounts to more than 11 trillion dollars. For the remainder of 2020, debt service payments will total $3.9 trillion. This debt has exploded in recent decades, leaving most developing countries in an unsustainable financial situation. Defaults and debt adjustments appear to be a constant among developing countries; They arrive on time for reasons that are often external to the fundamentals of their economies.
The transformation of austerity into a permanent condition is what has weakened the public health systems of so many countries and left them vulnerable to this global pandemic. Continuing to pay the debt service and remaining obliged by these debt burdens means that developing countries will not be able to face the pandemic efficiently and effectively, nor will they build the necessary systems for future health emergencies.
Every dollar of debt service that is spent to repay a bank, or a wealthy bondholder, is a dollar that cannot be used to buy a fan or for emergency food support. In the crownshock crisis, this is both morally indefensible and economically irrational.
The suspension or postponement of the debt does not provide a basis for the necessary development of these countries. It just differs the accounts.
It is time to abolish these hateful debts, which cannot – in any case – be paid during the coronavirus recession. Both public and private creditors took risks with their investments. They exploited the needs of developing countries by lending them money at obscene interest rates. It is time for them to pay the price for the risk they took, rather than forcing poor countries to pay a capital precious to themselves.